Which of the Following Would Be an Example of the "Transactions

question 124

Multiple Choice

Which of the following would be an example of the "transactions motive" for a firm holding cash balances?

• A) investing "excess cash balances"
• B) anticipating a downturn in the economy
• C) purchase of inventory
• D) take advantage of an anticipated decline in the price of raw materials

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Definitions:

Last Year

Refers to the 12-month period directly preceding the current date, used in comparative financial analysis.

Northern Division's Sales

The total revenue generated by the Northern Division of a company within a specific period.

Net Operating Income

The total profit of a business after all operating expenses are deducted, but before taxes and interest are considered.

Fixed Expenses

Costs that do not fluctuate with the level of production or sales, remaining constant even when business activity levels change.